May 1 - Lloyds Banking Group's pretax profit jumped 22 percent in the first quarter as costs fell and margins improved. As Sonia Legg reports it will strengthen the bank's plan to pay its first dividend since it was rescued during the financial crisis.
A 22% jump in pre-tax profit - not bad for a bank. But Lloyds is very much a recovering patient. It was rescued during the financial crisis and is still 25% owned by the government. A 5% fall in costs from a year ago and better margins helped, says IG's Brenda Kelly. SOUNDBITE (English), Brenda Kelly, Chief Market Strategist, IG, saying: "The fact that it doesn't have any provision for PPI, the fact that it has seen a rise in its first quarter pre-tax profit to 1.8 billion. And I suppose the fact that it is separating the TSB is creating a degree of competition in the market." A dividend is now on the cards - the first since taxpayers pumped 20 billion pounds into the bank to keep it afloat. Restarting them is seen as a key issue for Britain. So is a thriving banking sector - financial services make up 10% of the economy. SOUNDBITE (English), Brenda Kelly, Chief Market Strategist, IG, saying: "Certainly the banking sector is a huge, important part of the UK recovery and, given the amount of revenue it derives and the amount of tax it actually pays into the system, I think it is important that we see success in this particular sector." Lloyds was ordered to sell TSB by European regulators in return for the bailout. It's thought the float will take place in mid-June with TSB valued at around 1.5 billion pounds. Lloyds shares rose more than 5% after the results - the prospect of a dividend encouraging many. The bank used to be one of the highest paying stocks in Britain.